Answer:
Karen will owe an interest amount of=$36.75
Explanation:
<em>Step 1: Determine the total amount after a month </em>
The total amount compounded annually can be expressed as;
A=P(1+R/n)^(nt)
where;
A=total amount
P=principal amount
r=annual interest rate
n=number of periods the interest is compounded annually
t=number of years
In our case;
A=unknown
P=$2,450
r=18%=18/100=0.18
n=12
t=1/12
replacing;
A=2,450(1+0.18/12)^(12×1/12)
A=2,450(1+0.18/12)^1
A=2,450(1.015)
A=$2,486.75
<em>Step 2: Determine the interest amount after a month </em>
Interest amount=total amount-principal amount
where;
total amount=$2,486.75
principal amount=$2,450
replacing;
Interest amount=2,486.75-2,450=$36.75
The interest amount=$36.75
